Ivy Schmerken, Wall Street & Technology
NYSE Group has entered into discussions with the NASD to create a trade reporting facility (TRF), serving customers reporting off-exchange trades in all listed NMS (National Market System) stocks.According to the release, the NYSE wants to become the lowest-cost trade reporting provider to ensure its customers have access to its services.
"For customers seeking a reliable and competitively priced venue to report internally executed transactions, our trade reporting facility will be a low-cost, high-value option," stated Jerry Putnam, NYSE Group president and co-COO.
Up until recently, broker-dealers that were matching orders internally or using a proprietary system to match orders, would report those trades to a TRF operated exclusively by Nasdaq and the NASD.
According to published estimates, about 30 percent of Nasdaq order flow is reported as internalized trades, while the figure for NYSE stocks is 16 percent.
In the wake of Nasdaq receiving Securities and Exchange Commission (SEC) approval to become a national stock exchange, the SEC allowed Nasdaq and NASD to keep their jointly operated TRF, but also opened this up to competition, thereby ending Nasdaq's and NASD's monopoly.
On Sept. 21, the SEC published a proposed rule change filed by the NASD to form a new TRF with the National Stock Exchange (NSX).
Last Friday, the NYSE announced at the Securities Traders Association (STA) Conference that it was in talks with the NASD to form a trade reporting facility by early 2007.
If this materializes, stock brokers that internalize trades in NYSE-listed stocks and Nasdaq listed stocks would be able to report those trades to a jointly operated NYSE/NASD trade reporting TRF. Other exchanges such as Boston and Chicago are expected to follow suit, according to published reports. Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in the capital markets. As an industry expert, Ivy has reported on a myriad ... View Full Bio